real estate
'Timing' market a risk for first-time buyers

If the buyer were to get the home for 5 percent less (a \$12,500 discount), or \$237,500, and put 20 percent down (\$47,500), the monthly payment would be \$1,139 -- a savings of \$60 a month. Over 10 years that would mean a savings of \$7,200.

But what if the interest rate went up 1 percent while the buyer was waiting for prices to drop that same 5 percent? The same mortgage at 7 percent interest would mean monthly payments of \$1,264 -- or \$125 a month more than the 6 percent mortgage and even \$65 a month more than buying the house at the full price while the interest rate was lower.

Price vs. interest rate
 Sale price: \$250,000 \$237,500 \$237,500 Down payment: \$50,000 \$47,500 \$47,500 Amt. financed: \$200,000 \$190,000 \$190,000 Interest rate: 6% 6% 7% Mo. payment: \$1,199 \$1,139 \$1,264 10-year interest paid: \$111,263 \$105,700 \$124,732 10-year principal paid: \$32,269 \$30,998 \$26,957 10-year total paid: \$143,532 \$136,698 \$151,689

The chart demonstrates that: 1) Over 10 years the buyer saved \$6,834 (\$143,532 minus \$136,698) by negotiating the lower price while interest rates were low; and 2) that a 1 percent higher interest rates cost the buyer \$8,157 more -- or \$815 more a year -- despite the sale price.

Put another way, in order to make up for a 7 percent interest rate in the example, a buyer would have to get the sale price down to just over \$214,000 and put almost \$44,000 down in order to get the same monthly payment of \$1,139 -- in this case a 14.4 percent price drop.

You can use the Bankrate.com mortgage payment calculator to compute various mortgage/down-payment/monthly payment scenarios. Another tool that can aid in the choice between buying and renting is Bankrate's rent vs. buy calculator.

###### Provable income critical
One profound change that has occurred in the housing market is that lending standards have tightened significantly in the past year. First-time homebuyers are generally required to have stronger credit scores and larger down payments than they had over the past few years of easy money.

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 Product Rate Change Last week 30 year fixed refi 3.83% 0.05 3.78% 15 year fixed refi 3.02% 0.01 3.03% 10 year fixed refi 2.94% --0.00 2.94%